CFP Board Squares Off Against Fee-Hike Critics

After the Certified Financial Planner Board of Standards announced plans to increase fees 80% annually to support a marketing initiative to increase public awareness, our discussion board exploded in opposition.

The CFP Board's chief executive officer, Kevin Keller, said Monday it could increase fees to $324 annually by July 1 if the measure is approved in November.

The CFP Board said it plans to use the $9 million in additional funds to pay for an aggressive public awareness campaign. It has selected Arnold Advertising, the sixth largest advertising agency nationally that boasts clients such as Fidelity, USA Today and McDonald's, to run the campaign.

When Keller delivered the news at the FPA Conference, conference attendees seemed resigned to the fee hike, but the discussion board reacted with venom. One reader asked why the CFP Board wouldn’t use its $25 million surplus to pay for a marketing campaign, another requested an audit of the CFP Board’s finances, and a third alleged the board would use the additional funds to “fund… politically motivated campaigns.”

Marilyn Mohrman-Gillis, the CFP Board's managing director for public policy and communications, responded to readers questions:

Q: What do you think about the outcry from CFPs regarding this fee increase?

Marilyn Mohrman-Gillis: I think if you put it in perspective we wouldn’t call this an outcry. From our calculations, there are about 84 comments [as of Thursday evening] from 40 people talking back and forth to one another. These are 40 people opposing this and that is not surprising. But we have 62,000 CFP certificants and from our telephone survey, the vast majority supports a marketing campaign even if it requires fees to increase. According to a statistically significant survey of our CFPs, 83% support increased fees for a marketing campaign. We also conducted an online survey of our certificants and over 7,000 responded to that survey which is about 12% of certificants, about a public awareness campaign and 94% said they’d support such a campaign.

The bottom line is when you have 40 people talking on your blog, we’ll take that into consideration. We are taking all feedback back to the board, but we’ll pay a lot more attention to the exhaustive research we’ve done on this issue. Since September, we’ve been in 12 cities nationally talking to certificants. We did a live webinar that was attended by over 300 people. We have done a ton of communication with our certificants. Since September, we’ve been getting the message out and getting feedback. We are doing a very carefully feasibility study.

We feel confident even with an increase of $12 per month, we believe that our fees are very very standard and consistent with other certification organizations.

Q: How long has the CFP Board been considering this fee increase?

MMG: For at least two years we’ve been on the road talking to certificants and discussing this. We’ve been doing research with Arnold Worldwide since March. We’ve been really engaged. We launched a feasibility study in May and all of this information will go back to the board of directors in November where they will decide whether and how to move on this campaign.

Q: Some CFPs are worried that this money will be used to “fund… politically motivated campaigns.” What will these additional funds be used for?

MMG: The additional $12 a month will be used to support the public awareness campaign. The board has been very clear on this. I think the board will continue to be clear on that statement. There is no intent at all to have this additional money be used for other CFP board functions, which are very important. This additional money is to support the public awareness campaign. When you think of $12 a month or $144 a year, what can you do as an individual to market your business for $144? Collectively though, we can build a $9 million public awareness campaign. When you put it like that, people say, “Oh yeah, that makes sense.”

Q: Tell me about the size of the CFP Board’s staff. There seems to be some confusion.

MMG: We have 55 staffers. Most of our people are in education, enforcement, standard setting and customer service. We have, at this point in time, hired a new managing director of marketing and business development to manage this campaign. Our public policy department has three people. … We are a non-profit organization. Our mission is to benefit the public by granting the CFP certification. All of our public policy initiatives are aimed to uphold that mission.

Q: Why did the organization move to Washington, D.C.? How has it helped the organization and its members?

MMG: The organization was originally based in Denver. It moved to D.C. three years ago. And that was a decision that was made in an effort to play more of a role in advocating public policy on behalf of the public and consumers. There was a notion we could do more in Washington to raise the visibility of financial planners, the CFP mark, the value of that credential and also more effectively serve our role in terms of public policy.

Q: Are you worried about losing members as a result of this fee increase?

MMG: We did some historical research in terms of the last two fee increases. The last two times we increased fees were in 2005 and 1999. Our data shows that there was an insignificant falloff in terms of renewals. At this point, we don’t anticipate that this will be any different particularly given research we have done showing the support for this public awareness campaign. While no one like increases in taxes, or increase in anything, when people see the value we can bring to them and to their business, they get it. It makes sense. For $144 a year, CFPs get to participate in launching a significant and long overdue marketing plan.

Q: Why not use the organization’s cash reserve to fund the marketing initiative rather than increasing fees? As a non-profit organization, why is the CFP Board sitting on such a large cash reserve?

MMG: We are going to use a portion of the reserve to launch this. We have $23 million in reserve, we will use $6 million for this. Our annual budget is $14 million, our remaining reserve after that allotment is a little over that. We think that is a fiscally prudent position to be in. This isn’t a one- or two-year campaign. We need a mechanism that can allow us to engage in a long-term campaign.

We checked GuideStar (a non-profit tracking organization) and looked at the reserve we’d have left and it is in line with other non-profit organization.

Q: How will the marketing initiative help individual CFPs? How will it specifically help CFPs in smaller markets?

MMG: This campaign is a national campaign to increase awareness, and preference for CFPs. We think it will help CFPs at large firms in large markets and solo practitioners in small markets. Nine million dollar is not a lot of money. We have to use the funds prudently and in a smart way. We have identified a national target audience, but it is focused on mass affluent validators (about 9% of people nationally.) We think there are mass affluent validators in small towns and large cities.

Q: Are you worried these heftier fees could make young advisors rethink taking the CFP exam?

MMG: No, just the opposite. Think about it: The more awareness the public has about the benefits of CFP certification, the more we anticipate and believe it will drive people to take this exam and have this certification behind their name. This will make the distinction more valuable, not less valuable.

Q: What do you think of the assertion that some people want a “thorough audit of the CFP Board’s books and an in depth review of salaries, perks, expenses, etc.?”

MMG: We are a [non-profit organization], we are audited annually by an independent accounting firm and we face significant scrutiny from the IRS. We have a board of directors that is engaged and careful. We have a very very effective policy governance mechanism in place… I am not sure how any organization can work in a more responsible and transparent way.

Q: One reader alleged that CFP Board is owned by a for-profit company, Apollo. Is this true?

MMG: We actually had to do some research on this one. The best we could discover is that the College for Financial Planning, which is not affiliated with the CFP Board is owned by Apollo. We are a non-profit company. We are not owned by Apollo. At one time, before CFP Board was created in 1985, the College for Financial Planning used to own the CFP marks. They no longer do. Rather, the College for Financial Planning provides a registered program to meet one of our two education requirements (the other being that you need a bachelor’s degree.)

Q: If the current membership fees ($360 paid every other year) havent been used for marketing, what is it being used for? Explain how the CFP Board helps CFP practitioners?

MMG: The CFP board at its core is a certification organization. … To do that, we have educational requirements. We basically have a mechanism to create and help qualified program providers. We review their educational coursework. We have a rigorous exam that is validated. We just went through an exhaustive job test analysis to evaluate the exam’s subject areas. … The pass rate is somewhere in the 50% range. We audit the continuing education credits. We do a background check on each applicant. We have a rigorous enforcement mechanism, which is one of the major things we do. In addition, we do the normal things an organization like this would do in terms of communications, public policy, and consumer advocacy outreach.

Q: When the current marketing campaign ends, do you plan to reduce fees?

MMG: We don’t anticipate the campaign will end in the near future. The concept of the campaign is a multi-year commitment. The board has already told us that quantitative metrics will measure the success of this initiative. That is key to the board. On an annual basis they will examine quantitative metrics. We believe it will be successful, but if it isn’t, my sense is they will put in a mechanism that will return the level of renewal fees. If they stop the campaign, they will not keep the fees at an elevated level